Capital Corp of the West Announces a 20% Increase in Second Quarter 2002 Earnings From a Year Ago Quarter.Business Editors Capital Corp of the West (Nasdaq:CCOW CCOW Clinical Context Object Workgroup CCOW Channel Control Order Wire CCOW Control Channel Order Wire CCOW Contributing to Coalition Operations Worldwide CCOW Computer Care on Wheels (Brantford, Ontario, Canada) ) today announced a 20% increase in net income for the quarter ended June June: see month. 30, 2002 over the same 2001 quarter. "During the second quarter, interest rates have been fairly stable with current projections for a flat rate environment for the remainder of the year" stated Chief Executive Officer, Tom Hawker. "During the period we have seen annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. for deposits and loans in excess of 20% and we anticipate only a slight decline in these trends for the remainder of the year. This is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the continued strength of the markets we serve." Chief Financial Officer, R. Dale Dale , Sir Henry Hallett 1875-1968. British physiologist. He shared a 1936 Nobel Prize for work on the chemical transmission of nerve impulses, particularly for the isolation and study of acetylcholine (1914). McKinney McKinney, city (1990 pop. 21,283), seat of Collin co., N Tex.; inc. 1849. It is a shipping point for cotton, cattle, and grains. Manufacturing includes electronic equipment, leather and food products, marble items, and copper wire. , added, "Margins for the second quarter averaged 4.59% or about a 7 basis point decline from the first quarter. The margin decline is primarily a result of higher net cash positions for the current quarter with earning asset Earning asset An asset that generates income, e.g., income from rental property. rates showing only a modest decline from the first quarter. If the current rate environment continues, we can expect stable margins for the remainder of the year in the 4.50% to 4.55% range." Earnings Increase 20% Earnings for the second quarter of 2002 increased $403,000, to $2,384,000 or $.44 per share, a 20% increase over earnings of $1,981,000 or $.38 per share during the same period of 2001. Cash earnings per share, defined as earnings before amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , for the quarter and comparable 2001 quarter were $.47 and $.41. Annualized return on average assets and return on average equity were 1.01% and 14.10% for the quarter compared with 1.08% and 13.80% for the same 2001 quarter. The increase in year over year results was primarily due to an increase of $1,455,000 in net interest income that was achieved by an increase of $207,525,000 or 31% in average interest earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin . The net interest margin for the second quarter of 2002 was 4.59%, a decrease of 53 basis points from the 5.12% achieved during the second quarter of 2001. Other expenses incurred during the second quarter, 2002 increased $1,037,000 over 2001 levels due primarily to increases in salaries and benefits of $511,000 that were the result of management and support staff increases necessary to accommodate branch expansion and normal salary progression progression, in mathematics, sequence of quantities, called terms, in which the relationship between consecutive terms is the same. An arithmetic progression is a sequence in which each term is derived from the preceding one by adding a given number, d, . Income tax expense decreased $91,000 to $715,000 during the second quarter of 2002, which compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the $806,000 recorded during the same period in 2001. Credit Quality The Company's allowance for loan losses was $11,261,000 or 1.93% of loans at June 30, 2002. Nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. totaled $6,785,000 or 0.70% of total assets and nonperforming loans stood at $6,725,000 or 1.15% of total loans. At June 30, 2002 the allowance for loan loss totaled 167% of nonperforming loans. This compares to an allowance for loan losses of $8,802,000 or 1.96% of total loans at June 30, 2001. At June 30, 2001, nonperforming assets totaled $3,035,000 or 0.39% of total assets, nonperforming loans totaled $2,452,000 or 0.55% of total loans and the allowance for loan loss totaled 359% of nonperforming loans. "The growth in nonperforming assets between June 30, 2001 and June 30, 2002 was primarily the result of increased nonperforming loans within the Agricultural segment of the loan portfolio," stated Jim Sherman Sherman, city (1990 pop. 31,601), seat of Grayson co., N Tex., near the Red River; inc. 1858. Originally on a stagecoach route, it is a highway and railroad junction. Manufactures include electronic equipment, processed foods, military equipment, and metal products. , Chief Credit Officer. "We do expect, however, to restore a current and well secured $2.4 million credit to performing status in the third quarter." Book Values -- Capital The Company's capital at June 30, 2002 stood at $69,792,000 compared with $59,139,000 as of June 30, 2001. Book value and tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value per share totaled $13.18 and $12.49 as of June 30, 2002 as compared to $11.60 and $10.84 as of June 30, 2001. The Company's tangible leverage capital ratio stood at 7.51% at June 30, 2002, compared with 8.24% as of June 30, 2001. The Company's risk based capital ratio stood at 10.83% at June 30, 2002, compared with 11.53% as of June 30, 2001. Forecasted Information Looking forward to the remainder of 2002, R. Dale McKinney, CFO See Chief Financial Officer. of the Corporation, comments, "Since year end the bias in interest rates has shifted from downward to a flat rate environment for the near term. Margins for the second quarter, after adjusting for changes in net cash position, show only a modest decline from the first quarter margins and are as expected. If the current flat rate environment continues, margins are anticipated to average 4.50% to 4.55% for the remainder of the year. The Company's effective tax rate for combined State and Federal tax remains at a comparatively low 23% relative to banks in our peer group. This low effective tax rate is anticipated to continue for the remainder of 2002 and is a result of several programs such as enterprise zone credits, low income housing tax credits, REIT's, and investments in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). State and Municipal securities." "In the current flat rate environment, earnings increases in the 17% to 20% range are anticipated for 2002 or fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of in the $1.71 to $1.75 range for the full year. Net charge offs for 2001 were $2.6 million and are still anticipated to continue at these relative levels for 2002. For the 2002 year, loans are anticipated to grow in the $95 to $100 million range and deposits to grow in the $110 to $120 million range. The Corporation ended the second quarter with a 10.83% risk based and 7.51% leverage capital ratio. Both ratios are well within the well-capitalized regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. definitions. The ability to internally generate capital to support corporate growth is projected to continue with resulting risk based capital ratios anticipated in the 10.50% to 11.00% range and leverage capital ratios anticipated in the 7.5% to 8.0% range for 2002." New Chairman of the Board On June 28, 2002, Capital Corp of the West announced the election of Tom Van Groningen Groningen, city, Netherlands Groningen, city (1994 pop. 170,535), capital of Groningen prov., NE Netherlands. It is an important trade and transportation center. Manufactures include clothing, food products, furniture, and machinery. as its new Board Chairman. Since inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. , Capital Corp of the West, and its predecessors, have always separated the functions of the Chief Executive Officer and Chairman of the Board. For the past 25 years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Board Chairman has been elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. for a one year term at the annual meeting. More recently, the Chairman has usually served for two one-year adj. 1. completing its life cycle within a year. Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants" annual phytology, botany - the branch of biology that studies plants terms. "It has always been our belief that this fosters more of a team approach and promotes a more collegial col·le·gi·al adj. 1. a. Characterized by or having power and authority vested equally among colleagues: "He . . . and democratic atmosphere," explained CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Tom Hawker. "Knowing that the position can be rotated rotated turned around; pivoted. rotated tibia see rotated tibia. amongst board members with more than five years of service promotes greater involvement by all the members of the Board and enhances individual accountability The traceability of actions performed on a system to a specific system entity (user, process, device). For example, the use of unique user identification and authentication supports accountability; the use of shared user IDs and passwords destroys accountability. . We find we benefit immeasurably im·meas·ur·a·ble adj. 1. Impossible to measure. See Synonyms at incalculable. 2. Vast; limitless. im·meas by having individuals with different strengths lead the Board in executing our strategic plan. This process also ensures against any one individual achieving substantial control over the board and its agenda to the detriment Any loss or harm to a person or property; relinquishment of a legal right, benefit, or something of value. Detriment is most frequently applied to contract formation, since it is an essential element of consideration, which is a prerequisite of a legally enforceable contract. of Capital Corp of the West and its shareholders." Products and Services On July July: see month. 2, 2002, Capital Corp of the West announced the June 28th completion of its purchase of SEC-registered investment advisor Investment Advisor 1. A person making investment recommendations in return for a flat fee or percentage of assets managed, known as a commission. 2. For mutual fund companies, it is the individual who has the day-to-day responsibility of investing and monitoring the cash and , Regency Regency, in British history, the period of the last nine years (1811–20) of the reign of George III, when the king's insanity had rendered him unfit to rule and the government was vested in the prince of Wales (later George IV) as regent. Investment Advisors, headquartered in Fresno Fresno (frĕz`nō), city (1990 pop. 354,202), seat of Fresno co., S central Calif.; inc. 1885. Settled in 1872 as a station on the Central Pacific RR, Fresno profited from irrigated farming as early as the 1880s. , Calif. "This finalized See finalization. a definitive agreement we entered into at the beginning of the quarter," said CEO Tom Hawker, "and now allows us to offer fee-based money management and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" to our customers in all of the counties we now serve. We look to Regency Investment Advisors, and other services we are beginning to offer through selected branches, to provide us with additional sources of non-interest income for a better balanced revenue mix going forward." Conference Call Recording Capital Corp of the West's second quarter 2002 earnings conference call is scheduled for July 11, 2002 at 7:00 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT . Investors have the opportunity to listen to a recording of the conference call by going the web site of the company www.ccow.com just after the call and following the instructions to play back the recorded conference call. The recording will be available on the web site for 30 days following the conference call. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. In addition to historical information, this release includes certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding events and trends, which may affect the Company's future results. Such statements are subject to risks and uncertainties that could cause the Company's actual results to differ materially. These factors include general risks inherent to commercial lending, risks related to asset quality, risks related to the Company's dependence on key personnel and its ability to manage existing and future growth, risks related to competition, risks posed by present and future government regulation and legislation and risks resulting from federal monetary policy. Reference Information Capital Corp. of the West, a bank holding company established November November: see month. 1, 1995, is the parent company of Regency Investment Advisors, Inc. and County Bank, celebrating 25 years of service as "Central California's Community Bank." Currently County Bank has eighteen offices serving our communities in the counties of Fresno, Madera, Mariposa, Merced Merced (mərsĕd`), city (1990 pop. 56,216), seat of Merced co., central Calif.; inc. 1889. It is a growing city and a center for tourism and farm trade in a cotton, fruit, and dairy region. , San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , San Joaquin San Joaquin (săn wäkēn`), river, c.320 mi (510 km) long, rising in the Sierra Nevada, E Calif., and flowing W then N through the S Central Valley to form a large delta with the Sacramento River near Suisun Bay, an arm of San Francisco Bay. , Stanislaus and Tuolumne Tu·ol·um·ne A river, about 249 km (155 mi) long, of central California flowing generally westward to the San Joaquin River. . As of the latest FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). data, County Bank has 5.1% market share of the seven counties in which it has retail branches. This ranks County Bank sixth out of forty-one financial intuitions in these counties. For further information about the Company's financial performance, contact Tom Hawker, President & Chief Executive Officer at 209/725-2276, or R. Dale McKinney Chief Financial Officer, at 209/725-7435.
Capital Corp of the West
Consolidated Statements of Income
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
------- ------- ------- -------
Interest income $14,590 $14,146 $28,438 $28,432
Interest expense 4,657 5,668 9,208 11,539
------- ------- ------- -------
Net interest income 9,933 8,478 19,230 16,893
Provision for loan losses 1,451 789 2,231 1,539
Other income:
Service charges on accounts 1,279 1,004 2,406 1,906
All other income 851 570 1,503 1,021
Other expenses:
Salaries and related
benefits 3,839 3,328 7,783 6,641
Premises and occupancy 571 519 1,140 984
Equipment 704 680 1,420 1,304
Professional fees 317 99 570 216
Marketing 219 230 407 441
Intangible amortization 170 198 340 396
Supplies 171 252 357 454
Other expenses 1,370 1,015 2,586 2,161
Dividends on Capital
Securities 152 155 306 218
------- ------- ------- -------
Total Other Expenses 7,513 6,476 14,909 12,815
------- ------- ------- -------
Income before income taxes 3,099 2,787 5,999 5,466
Provision for income taxes 715 806 1,391 1,573
------- ------- ------- -------
NET INCOME $ 2,384 $ 1,981 $ 4,608 $ 3,893
======= ======= ======= =======
Capital Corp of the West
Consolidated Balance Sheets
(Dollars in thousands)
2002
At June 30, Averages
2002 2001 YTD
-------- -------- --------
Assets
Cash and noninterest-bearing deposits
in other banks $ 40,340 $ 34,601 $ 28,214
Federal funds sold 15,340 6,785 11,755
Time deposits at other financial
institutions 500 500 500
Investment securities available for
sale, at fair value 230,831 202,354 227,640
Investment securities held to maturity
at cost, fair value of $65,410,000, and
$40,843,000 at June 30, 2002 and 2001 64,399 40,274 57,727
Loans, net of allowance for loan losses
of $11,261,000 and $8,802,000 at June
30, 2001 and 2000 572,393 439,810 535,973
Interest receivable 5,771 5,451 5,189
Premises and equipment, net 13,956 13,570 13,086
Intangible assets 3,665 3,881 3,320
Other assets 28,637 23,799 30,189
-------- -------- --------
Total assets $975,832 $771,025 $913,593
======== ======== ========
Liabilities and Shareholders' Equity
Deposits
Noninterest-bearing demand $138,851 $100,390 $120,760
Negotiable orders of withdrawal 100,019 82,806 99,771
Savings 221,840 200,678 213,989
Time, under $100,000 158,793 155,570 155,956
Time, $100,000 and over 154,380 111,193 138,759
-------- -------- --------
Total deposits 773,883 656,136 729,235
Other Borrowings 120,607 41,777 106,226
Accrued interest, taxes and other
liabilities 5,519 7,973 5,675
-------- -------- --------
Total liabilities 900,009 705,886 841,136
-------- -------- --------
Trust Preferred Securities and other
minority equity interests 6,031 6,000 6,027
-------- -------- --------
Preferred Stock, no par value;
10,000,000 shares authorized; None
outstanding -- -- --
Common stock, no par value; 20,000,000
shares authorized; 5,296,423 and
5,097,553 issued & outstanding at June
30, 2002 and 2001 45,898 39,583 40,557
Retained earnings 22,004 18,354 24,454
Accumulated other comprehensive income 1,890 1,202 1,419
-------- -------- --------
Total shareholders' equity 69,792 59,139 66,430
-------- -------- --------
Total liabilities and shareholders'
equity $975,832 $771,025 $913,593
======== ======== ========
Loan Portfolio Composition
June 30 June 30
(Dollars in thousands) 2002 2001
Percent Percent
Dollar of Dollar of
Loan Categories: Amount loans Amount loans
--------- --- --------- ---
Commercial $ 128,199 22% $ 90,509 20%
Agricultural 92,773 16 88,441 20
Real estate construction 72,508 12 38,013 8
Real estate mortgage 220,786 38 153,530 34
Consumer 69,388 12 78,119 18
--------- --- --------- ---
Total 583,654 100% 448,612 100%
--------- --- --------- ---
Less allowance for loan losses (11,261) (8,802)
--------- ---------
Net loans $ 572,393 $ 439,810
--------- ---------
Allowance for Loan Loss Activity
June 30,
2002 2001 2000
-------- --------- --------
(In thousands)
Allowance for Loan Losses:
Balance at beginning of period $ 9,743 $ 8,207 $ 6,542
-------- --------- --------
Provision for loan losses 2,231 1,539 1,531
-------- --------- --------
Charge-offs (1,133) (1,276) (1,351)
Recoveries 420 332 203
-------- --------- --------
Net charge-offs (713) (944) (1,148)
-------- --------- --------
Balance at end of period $ 11,261 $ 8,802 $ 6,925
======== ========= ========
Loans outstanding at period-end $583,626 $448,612 $368,501
======== ========= ========
Average loans outstanding $546,324 $417,685 $346,603
======== ========= =========
Annualized net charge-offs to
average loans 0.26% 0.45% 0.66%
Allowance for loan losses
To total loans 1.93% 1.96% 1.88%
To nonperforming assets 175.91% 289.99% 373.88%
Selected Financial Data
Three Three Six Six
Months Months Months Months
Capital Corp of the West Ended Ended Ended Ended
Selected Financial Data 06/30/02 06/30/01 06/30/02 06/30/01
------------------------------------------
Basic Earnings Per Share $ .45 $ .39 $ 0.88 $ 0.77
Diluted earning per share $ .44 $ .38 $ 0.85 $ 0.75
Annualized Return on:
Average Assets 1.01% 1.08% 1.01% 1.09%
Average Equity 14.10% 13.80% 13.87% 13.87%
Net Interest Margin 4.58% 5.12% 4.61% 5.24%
Efficiency Ratio 60% 61% 62% 62%
------- ------- ------- -------
Annualized Net Charge-offs to
Average Loans 0.30% 0.35% 0.26% 0.45%
Capital / Shareholder information
June 30, June 30,
2002 2001
------- -------
Book Value Per Share $13.18 $11.60
Tangible Book Value Per Share $12.49 $10.84
Leverage Capital Ratio 7.51% 8.24%
Risk Based Capital Ratio 10.83% 11.53%
Nonperforming Assets
June 30 June 30
2002 2001
------- -------
(In thousands)
Nonaccrual loans $ 6,060 $ 2,015
Accruing loans past due 90 days or more 665 437
------- -------
Total nonperforming loans 6,725 2,452
Other real estate owned 60 583
------- -------
Total nonperforming assets $ 6,785 $ 3,035
======= =======
Nonperforming loans to total loans 1.15% .55%
Nonperforming assets to total assets .70% .39%
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